.jpg)
Every October the College Board releases its college cost trend survey comprised of 3,500 colleges across America. This year's take-away... the average cost is going up, again! Who knew? Is that a bubble I hear about to burst. Some argue the never ending increase in post-secondary tuition, fees, room and board is increasing at an unsustainable level and looks much like a bubble that is about to burst. Could college tuition be the next great bubble to hinder our economy, who knows, but time will certainly provide all the answers.
Interestingly enough the rise at public colleges was more rapid than the rise in private colleges. Tuition and fees increased an average 6.5% at public colleges and 4.4% at private colleges. No surprise, but the economic woes of state and local governments have caused state sponsored schools to raise their tuition, fees, room and board at a faster clip than private colleges and hampered the saving efforts of many investors whose college savings are linked to the stock market. According to the survey...
The average total cost of a four-year public college for an in-state student is $19,388.
The average total cost of a four-year public college for an out-of-state student is $30,916.
The average total cost of a four-year private college student is $39,028.
All this talk about cost has got me thinking about savings. This survey is just one more indication that in order to be prepared you must have a plan and must save and invest to meet your goals. Most states provide one of the greatest vehicles by which to so and the federal government also kicks in a tax incentive if the money is used for qualified expenses. The 529 Plans. I've included my ABC's of 529 Plan below but keep in mind, not all state 529s are the created equal.
Maryland has a cadillac of a plan in the MD College Investment Plan and allows Maryland residents a tax deduction for up to $2,500 for annual contributions to the Plan per account holder, per beneficiary and regardless of income. Most state plans have such a deduction but you must be a resident in order to take the deduction on your tax return. The Maryland College Investment Plan is consistently rated among the best in the country by Morningstar. The Maryland Prepaid College Trust, the ugly duckling of the two is essentially an insurance contract and is a completely different story as it's not savings at all but rather prepaid expenses. It may not make sense for every investor seeking to save for college. Be sure to speak with a financial advisor on all these topics before proceeding. You'll want to get a comprehensive plan together and know all your options. The best decision is often the most well informed.
Check out the College Cost trend analysis below...
College Cost Trends - a survey of 3,500 colleges
To view Trends in College Pricing 2009, click click here
To view the companion report Trends in Student Aid 2009, click click here.
If you liked this article on college savings and the Maryland 529s you may also find my other articles on the same topics informative.
New qualified expenses for qualified tuition programs - 529 Plans
Tis the season for college savings plans and 529s
Should I save for Retirement or College first?
Tom Taylor, CPA is a fee-only, independent Financial Planner and Certified Public Accountant and can be contacted at Chesapeake Financial Advisors or Taylor & Company in Towson, MD. He is a member of NAPFA and the MACPA and AICPA.
Comments